Mobile wallet, in my opinion, is a stored value account that can store cash, debit/credit card details or even the loyalty card details on your mobile and make it easy for you to identify them with few known credentials like your mobile number and a mobile PIN. There are two types of wallets that are available in the market broadly viz.

* Wallet which has cards stored in them and used as a surrogate while doing the transaction. This means you store your debit/credit card details once when you create a wallet and you can use them subsequently using your mobile number and the PIN. The card account will be debited every time a transaction happens
* A wallet that stores cash equivalent called a stored value account. This is like your savings account without interest and you have your mobile number as the account number. This is a simple prepaid wallet that you can use only to the extent of money stored in the wallet account. Once you exhaust it you need to find a nearest retailer to load the money on your wallet or use your debit/credit card details to load this if you have one I can sense the thought that is going through your mind when you read this, why would anyone need a mobile wallet where the current options to pay (cash, debit and credit cards) are enough already. In a digital world with internet penetration likely to reach over 500 million people by 2017 and an increasing push from enterprises to reach customers through their mobile phone, it becomes a convenient tool to enable any transaction fulfilment through a wallet. Also, the customer need not remember multiple login passwords or card numbers etc. It is also secure since it works as a pesudo account that holds only the stored value. The transaction performed can only be authenticated if you know the mobile PIN and the OTP (which is sent you the phone at the time of the transaction). Increasingly in the internet world the customer wants really simple solutions for his daily life transaction and this can support that theory.

The evolution story so far

Unlike any new innovation, the mobile wallet was to replace the cash economy which constitutes 95% of the transactions that happen in the country. Serious efforts started somewhere in 2007 and are still being pushed.

Although the results are far from being successful, there is some hope as the last 6-8 months have seen faster adoption. The acceptance is far more challenging as this technology and its players have to create an ecosystem. This means not only you have to convince the customer, but the merchant as well who is to enable the transaction. The real trouble starts when you want to decide which one to enable first as this works only when both are enabled.

Let me explain this with an example. I get to a customer and explain the benefits of this wallet and he is interested in using this and quite naturally his next logical question would be: Where can I use this? Can I use this in the neighbouring kirana store or a medical store? My answer to which would be well, we can enable this when you sign up and you can very well see his interest levels going down by a notch. Now I go to the merchant who is a kirana store and explain the benefits of the solution and he asks how many customers use this in this locality. To this I say that I can onboard only when I have you accept this mode of payment. He responds by saying that get the customer first and he will accept afterwards.

Things have changed in terms of awareness. Over the last four years, a lot of ground has been covered and we now have customers transferring money through their wallets, we have them paying bills and doing recharges, booking travel tickets etc., Although a small percentage we have people using these wallets for e-commerce transactions.

Crystal ball gazing

I have been asked this question many a times in the recent past as to what the future of mobile wallets is and how things will shape up. We are seeing lot of positive reinforcements from all the stakeholders including the regulators, merchants, and customers. We are beginning to see engagement in tier 2 and tier 3 cities as. This clearly justifies heightened interest levels of the industry. Going forward, the players in this space will need to innovate and be nimble footed to survive and win this game.

Finally it is customer adoption and every customer needs to see a value in using this as opposed to a generic advantage of convenience and security which is intangible. The real benefit will come when you solve a specific pain area for the customer. For example, you can tell him to send a gift through a wallet as opposed to a voucher which the recipient may or may not require. The beauty of this solution is that anyone can create a wallet for a beneficiary from her contact book and other can pay into that wallet using their bank account or simply do a wallet to wallet transfer.

Now you have a customer who can decide what she wants to use that money for and for those who gifted him this money know that they have contributed to something which for sure will be of use. It will take time to build such compelling use cases as you need to convince and communicate the value proposition to the customer. Unless these use cases are explained to the customer and value is created we will not be able to reach the tipping point.